Intellectual property

A podcast patent piper wants to be paid

ADAM CAROLLA, an American television and radio show host, is not famed for his moderation. He is a sometimes beloved, sometimes hated loudmouth, who shifted from working with large media outfits on shows such as the syndicated radio programme "Loveline" (co-hosted with "Dr Drew" Pinsky) and the cable TV "The Man Show" (with Jimmy Kimmel) to a self-owned podcast, "The Adam Carolla Show". His programme has consistently topped Apple's iTunes charts as the top download. It is supported through advertising.

Thus it is no surprise that Mr Carolla's reaction to his company, ACE Broadcasting Network, being sued a year ago by Personal Audio, a non-practicing patentholding entity (a "patent troll"), was to speak out fiercely and at length. Personal Audio has a patent issued to it in 2012 that, according to one of its founders, James Logan, covers the production of serialised or episodic content that can be downloaded from a specific URL that client software can retrieve and store—effectively the definition of a podcast. (The precise claim in the patent is much more precise and lengthier.) Personal Audio has also filed suit against NBC and CBS, as well as Discovery Channel's HowStuffWorks.com and TogiEntertainmnet's TogiNet streaming station.

Mr Carolla has launched a campaign to raise the $1.5m his attorneys estimate the suit could cost at a minimum to defend, and is currently on a speaking tour of other podcasts to raise awareness (and funds). A benefit event is upcoming. He has raised $175,000 in a matter of weeks, and estimates $100,000 has been spent on lawyers so far. No trial date has yet been set.

While the suit does not detail a specific financial demand, Mr Carolla tells Babbage that he was asked for $3m, a sum he finds laughable based on his network's revenue (which he does not disclose). Because even a settlement would cost a significant sum to negotiate and then pay out, Mr Carolla opted to go full monty and oppose the suit entirely, while enlisting the aid of other podcasters. "They're suing me, but they're coming after you next," he tells his peers. (Your correspondent runs a wee podcast independently but has received no letters from Personal Audio.)

Patent defences are an expensive matter, and most cases are settled prior to litigation as there is little opportunity for a defendant to reclaim court costs if they prevail. Non-practicing entities typically have a war chest of funds, often won from other suits, to create an asymmetrical benefit. The firms are sometimes founded by lawyers or in a partnership with lawyers, thus providing a benefit in legal labour, too. And plaintiffs aren't required to provide a standard fee sheet to those from whom it might demand payments. Mr Logan says his firm has not yet released a schedule of fees it would propose podcasters pay. "We might have a more specific price sheet at some point in time," he says.

But the patent at the heart of Personal Audio's lawsuits is receiving acute attention as it highlights several weaknesses in both patent law and the US Patent and Trademark Office's (UPSTO) processes. First, Personal Audio fits the definition of a "patent troll", or an entity formed for the basis of prosecuting patent lawsuits and licensing without manufacturing products or services. The Obama administration has been slowly clamping down on such firms since 2011, with new rules put in place in 2013, and the reiteration of its intent to push further still in February.

Second, Personal Audio registered its operations in Marshall, Texas, the home of a subdivision of a US District Court well known for being friendly to patent plaintiffs and uninterested in allowing a shift to a more sensible or convenient venue relative to the alleged violations. Plaintiffs prevail nearly 60% of the time in the Eastern Texas venue, compared to just over 30% across all jurisdictions, according to a PricewaterhouseCoopers report. So-called non-practicing entities like Personal Audio prevail 47% of the time in the Eastern District of Texas compared with 24% of cases tried overall.

Third, the firm's podcast claim was filed in 2009. It updated an earlier 1996 patent application (8,112,504) that related to producing customised analogue cassette tapes with current news as part of a firm also called Personal Audio that Mr Logan ran at the time until its bankruptcy in 1998. The 2009 filing contained a description of podcasting as an outcome of the main portion of the patent, which remained unchanged. This is purely legal, though a number of rules have changed since 2001. Because the application was filed in 1996, the patent will expire in 2016, and Mr Logan says his firm may only address alleged violations starting in 2012, the year it was granted.

Finally, the issue of prior art comes into play, in which a patent must be original at the time it is applied for in the context of other patents and other work in the field. A patent examiner is supposed to consult extensively, but the USPTO has consistently fallen flat. (The Obama administration proposes more crowdsourcing of prior art to assist in this aspect.)

The Electronic Frontier Foundation (EFF) has come in on the matter of prior art, by fundraising tens of thousands of dollar to file an "inter partes review" or re-examination by the USPTO. EFF has much art prior to the 1996 application; that date is when the clock was set even though the additional claim was filed in 2009.

EFF's Daniel Nazer, a staff attorney, says the organisation became involved because of its concerns relating to the dissemination of free speech online. Mr Nazer says, "It occurred to them in 2009 that they invented podcasting." The EFF has "submitted some prior art and are arguing that the patent is anticipated and obvious on the basis of that prior art." The patent office's appeals board will determine by May 2014 whether to initiate a review which would take a year or more to complete. (In a sideshow to the main affair, Personal Audio attempted to subpoena EFF to obtain a list of donors to the re-examination campaign, claiming that if any defendant had contributed, it would constitute double-dipping under inter partes review regulations. EFF objected on First Amendment grounds; a judge found in EFF's favour because the review hasn't yet concluded, and thus there's no basis on which to make the claim.)

Mr Carolla cultivates a laddish persona, but appreciates EFF's efforts and has developed an unwanted expertise in patent issues, even as he defers to his lawyers (on his side "for now", he notes). He reckons his case may just be one of many involving Personal Audio. "They'll just find the top 100 most popular podcasts on iTunes. They'll start with me and just work down the line," he says.

Mr Logan, for his part, notes that his ideas were embodied in a product and company in the late 1990s that failed. "We feel that we are deserving of the rewards from having spent all that time and money back then inventing that stuff and patenting it," he says. It will be some time yet before the USPTO and a jury decide if they agree with Mr Logan in this matter or not.

Let me poke a gaping hole in this story. A patent holder has a right to enforce its patent to the full extent of the law. This includes seeking license-fees to use the invention covered by the patent, and if unsuccessful to seek damages and injunctive relief. If the court finds the patent unenforceable then the user of the invention is not an infringer but if the percent is upheld, the constitution and congress support the penalties the court will impose. For many years, inventors have been unable to portent their inventions against the financial might of industries. It is good to see the so-called "trolls" making the contest a fairer contest.

... he didnt invent podcasting.. if he did I'd agree with you. What he invented in 1996 was an audio cassette mailing system where people recieved tapes of people reading magazines and news papers. The reason he claims he invented podcasting is because originally he wanted to transfer them on the internet, but failed to find a way to do so and soon went bankrupt afterwards. No one used his ideas or designs to make podcasting happen, they didnt even know anything about his idea or him at all. This is a troll and nothing else. He updated the patent in 2009 to include podcasting which had been around for several years but he decided it was close enough to his invention and the court didnt realize what they were giving him a patent too.

I'm not saying his patent covers or not pod casting. That will be for the court to decide. If the patent does not cover podcasting as you feel, then there will be no damages. On the other hand, if the court does find the patent covers podcasting, then the patent owner should be able to collect his/her rewards. That's our patent system. Over the years patent owners have been shut-out by the financial might of various industries who steal inventions under the theme "sue-me if you can afford it" it's good to see "trolls" able to fight back.

You dont seem to understand the situation. His company is owned by another company that bought it for its patents. They sue companies over patents, thats all that company does. If you want to fight a lawsuit currently and the court declares that you are not violating any patents, you dont get any of your court costs back. Many people settle with patent suits even if they are extremely questionable. Currently there is a patent out for free wifi. And yes, people have been sued for offering free wifi in their store and settled. The patent system is broken. This patent in particular was updated in 2009, go read about it, he claims that because they are tranfering data in a catalog sorting style in an audio format that he owns that "idea" even though thats basically how most computers work on their own and he was never able to get it to work, he thinks his idea was original enough to sue about it, and the people authorizing it probably didnt understand what they were doing. Vague patents are the issue here not a poor business man who failed and was taken advantage of.

You are right in the stating that patent holders have every right to police their patent but to infer that this company is protecting its interests against the "financial might of industries" is not correct. Very few podcasts make money. This company is just squeezing small businesses and hobbyists out of money, even if they lose their case. That is the fault in the system, that bowing to settlements and licensing fees or going out of business are the only options. Mounting a legitimate defense is just not affordable and is a massive waste of time and money. The "financial might" here is CLEARLY on Personal Audio's side.

I can not predict the outcome of the patent lawsuit. That is for the Court to resolve. But, I believe the term "patent troll" was invented to influence the public to believe persons should not try to exercise their right to enforce patent rights against infringers. This is the rare case of an entity having sufficient resources to stand-up against infringers and compensate the inventor according to his contribution to the development of podcasting, if the patent is enforceable.

That's correct. Mr Logan is a serial entrepreneur and inventor who tells your correspondent with many practical and produced devices and services to his name, and several ventures cooking.

Personal Audio also previously prevailed in one lawsuit with Apple (over playlists), and has settled or signed licensing agreements with other firms.

Mr Logan in being a participant in the outcome and in speaking publicly and often in hostile forums (like Slashdot and Ars Technica) about his firm is distinct from many "patent trolls" who hide ownership through a series of shell companies, and, when principals are pressed, may deny any involvement or misstate the course of action underway.

That Loveline version was the best. They were great together because Adam both respected and disrespected Drew and Drew treated Adam like he has a brain.

The legal system always has trouble with the highly litigious. There are people who sue hundreds of times a year. The system has trouble with this because we presume there's merit until the issue is heard. And we allow suits for just about anything: ridiculous stuff like infliction of emotional distress cases filed against people who, it is claimed, said something mean.

There was an old common law offense called, I think, champerty, though I don't remember how to spell it. But that was trafficking in lawsuits, meaning some form of monetary or bartered inducement to sue, like "sue this guy and I'll pay you x or do y for you." Doesn't apply to the hyper-litigious.

Thing is any lawsuit takes money to defend. It happens that patent cases cost much more on average because they involve a lot of discovery and research into prior art claims and the like. This kind of thing will be very hard to squash. A step would be to increase penalties against filers deemed to be frivolous, but I wonder how often those would be applied ... and their application might only make cases drag on even longer and become even more expensive.

After hearing Mr. Logan talk I agree. He represents the most repulsive aspects of the worst of the worst patent lawyers. Essentially, a human being more concerned with money and power than actually working to contribute something lasting to society and even worse, not letting others work to contribute something lasting to society. "I worked hard to submit a patent for a nebulous concept then I purposefully did nothing to further this idea in the hopes I could sue someone to smithereens later" what utter garbage and he definitely knows it. There is definitely a circle of hell for unscrupulous lawyers, and I pray there's a special circle for patent trolls like him.